Cinnamonum zeylanicum (cinnamon) is widely used in traditional system of medicine to treat diabetes in India. The present study was carried out to isolate and identify the putative antidiabetic compounds based on bioassay-guided fractionation; the compound identified decreased the plasma glucose levels. The active compound was purified by repeat column and structure of cinnamaldehyde was determined on the basis of chemical and physiochemical evidence. The LD(50) value of cinnamaldehyde was determined as 1850+/-37 mg/kg bw. Cinnamaldehyde was administered at different doses (5, 10 and 20 mg/kg bw) for 45 days to streptozotocin (STZ) (60 mg/kg bw)-induced male diabetic wistar rats. It was found that plasma glucose concentration was significantly (p<0.05) decreased in a dose-dependent manner (63.29%) compared to the control. In addition, oral administration of cinnamaldehyde (20 mg/kg bw) significantly decreased glycosylated hemoglobin (HbA(1C)), serum total cholesterol, triglyceride levels and at the same time markedly increased plasma insulin, hepatic glycogen and high-density lipoprotein-cholesterol levels. Also cinnamaldehyde restored the altered plasma enzyme (aspartate aminotransferase, alanine aminotransferase, lactate dehydrogenase, alkaline phosphatase and acid phosphatase) levels to near normal. Administration of glibenclamide, a reference drug (0.6 mg/kg bw) also produced a significant (p<0.05) reduction in blood glucose concentration in STZ-induced diabetic rats. The results of this experimental study indicate that cinnamaldehyde possesses hypoglycemic and hypolipidemic effects in STZ-induced diabetic rats.